The Self According to Others: Explaining Social Preferences with Social Approbation

Abstract

In past decades, significant behavioural work has been done in economics contesting the human agency model known as Homo Economicus. These findings are, however, far from integrated in mainstream economic theory, which builds heavily on the neoclassical tradition. Beyond tracing the axiomatic foundations of mainstream economic agency, I reconstruct the argument made by Bernard Mandeville and Adam Smith that human choice also depends on the desire for social approbation. The social approbation mechanism complements material self-interest and provides a more diverse toolset when explaining social preferences. I begin by proposing that mainstream economic agency confines the study of human action, in particular large-scale collaboration, to an artificially-limited spectrum because it reduces society to atomistic individuals who maximise one all-purpose measure of value: utility, which is often instrumented with consumption. Collective action is therefore only sustainable when material incentives are in place, as the economic agent rides for free unless financially penalized. To explain pro-social behaviour from the standpoint of self-interest, Mandeville and Smith propositioned that agents also maximise social approbation, which conveys incentives to act pro-socially because the desire for others’ approval encourages compliance with social norms. The upshot for collective action is that, assuming social norms represent common goals, approval from others provides an extrinsic motive for pro-social behaviour. I formalise the mechanism by proposing a simple utility function in which agents maximise social approbation as well as material self-interest.

Posted for comments on 20 Nov 2017, 11:28 am.

Comments (1)

The argument is that behavioural economics has created a crisis for Orthodox neoclassical economics which is premised on material self-interest. The 18th century economics of Mandeville and Smith (which is premised on the incentive of social approbation) is more consistent with behavioural economics findings. Parts 1 to 3 cover the first topic, parts four and five cover the second.

The text is heavy going. It suffers three recurrent defects. Incorrect terms or words are often used altering the meaning of the sentence away from the author’s intention. Verbatim quotes are combined with authorial insertions and sometimes lack in probative value. And the syntax is not always idiomatic.

The first argument, that behavioural economics constitutes a crisis for orthodoxy, is not novel. Parts 1 to 3 read as if the author is trying to work the argument through for himself. I don’t think they add anything much to an informed reader. The point has been made, has been absorbed, and is even contested. It is not as secure as the author thinks. He repeatedly defines self interest and neoclassical economics as ‘material’ self-interest. It is not clear what that means and in the literal sense it is not true . The author himself mentions the choice of leisure, which is not a material good, but discretion over the use of time. It could be argued that leisure constitutes the sacrifice of income and is material in that sense. But then there are other choices, including altruism and social preferences, which might also involve a sacrifice of income, but the author appears to think that neoclassical economics excludes them as legitimate choices. I think that is not the case. Altruistic choices are available to individuals, but they are discretionary, not binding. This is actually consistent with the behavioural findings in which prosocial choices are not made by everyone, but by a large minority or small majority. There are always some antisocial players. The example of the ultimatum game is not I think compelling, since self-interested interpretations are also available.

My advice would be to drop parts 1 to 3 altogether, and to distil their argument into a page or two. I disagree in detail with some of the arguments in this section but since I think it is redundant I will not specify my comments in detail. I can however provide this critique to the author directly in the form of a scan of my comments on his text . Deleting these parts would also reduce the size of the article to one that is more manageable. Part four also suffers from some of the defects of the first three but the argument is less familiar and more interesting. Part five is an attempt to formalise the argument of part four. I do not feel competent to evaluate it. Hence my detailed comments which follow below, are meant to highlight problems mostly in part four.

Detailed comments

p. 23, quote This is presented as an indented verbatim quote. Usually quotes this short are not indented but incorporated into the text. It appears that the first five words have been inserted by the author and only the section in quotes is from David Hume. Furthermore, I don’t think that the quote validates the interpretation of David Hume that precedes it in the text.

p. 24 First two paragraphs are to the point. The best in the article. However, it is not made clear whether the Joseph Butler mentioned is a contemporary of Mandeville or of ourselves. Inserting his dates would solve this problem. [He is a contemporary of Mandeville]

‘branded as’ – not the right term. Perhaps ‘characterised as’?

‘On the contrary, the limbic system’ – should be ‘in contrast, the limbic system’

p. 26 ‘Smith depicted improvement as an “innate desire to receive the approbation of others.” [The quote is from a recent academic article]. But surely whatever improvement is, it is not a desire. Maybe it should be ‘the satisfaction of an innate desire to receive the approbation of others’, but that is not what the quote says. There is a typo in the title of the journal in the reference to this quote.

‘Rousseau identified that’ — non-idiomatic. Maybe ‘considered that’.

p. 27 ‘change the nature of wealth acquisition from having intrinsic to instrumental value’ – non-idiomatic. The appropriate form is ‘from having an intrinsic value to an instrumental one.’

‘Smith does acknowledge that wealth is accumulated beyond material needs’ – not clear what kind of needs are assumed here. Is it subsistence requirements? Is it physiological needs? Is it some conventional standard of living?

p. 28 indented quote at the top opens with three words inserted by the author.

Second quote opens with a word inserted by the author.

p. 29 ‘resemblance empathy’ should be ‘resembles empathy’.

‘connects individual’ should be ‘connects the individual’.

p. 30 proprietary – should be propriety.

disprove – should be disapprove.

p. 31 Top paragraph – very good points.

Consequentially – should be consequently.

Cultivated – not the right word: suggest ‘developed’.

p. 32 ‘independently from’ – should be independently of?

Quote from Mandeville is not probative. It does not validate the preceding argument.

‘He proposed that’ – not idiomatic. He argued that.

P. 34. ‘Mandeville thought of the self-interested agent might value…’ – So did Smith in his reference to soldiers in chapter 10 of book 1 of The Wealth of Nations.

p. 37, note 113. This argument merits a quote.

Note 115. Typo in the title.

p. 38 ‘this mechanism takes the form of the impartial spectator in Smith’. This requires an explanation. The quote that follows is not probative.

The following quote from Hont does not clarify. It is convoluted and confusing.

‘Is not holistic’ – should be ‘is not exclusive’.

*I supervised an undergraduate dissertation which was a previous version of this paper.